Opening remarks by Minister S Iswaran at the Singapore International Energy Week 2016
24 Oct 2016
Ladies and Gentlemen
1. Good morning. I would like to extend a warm welcome to all of you to the Singapore International Energy Week (SIEW). Now in its 9th year, SIEW is Asia’s leading platform for top policymakers and energy practitioners to discuss global energy issues, exchange views and forge closer cooperation. This year’s theme, “New Energy Realities”, calls attention to the challenges posed, and opportunities created, by significant shifts in the global energy landscape.
New Energy Realities
2. An oversupplied oil and gas market, slowing demand and weak global economic outlook have kept energy prices lower for longer than many had expected.
3. Global oil demand growth continues to be slow, reaching a four-year low in the third quarter of 2016, although there are some preliminary signs of recovery. The International Energy Agency (IEA) expects global oil demand growth to be 1.2 million barrels per day this year, with similar growth expected for 2017. Nonetheless, it is uncertain when the global oil market will re-establish a sustainable equilibrium. The outlook for gas is even more muted, with the excess supply expected to continue for some time. Wood Mackenzie estimates that the global gas market could be left with 70 million tons in uncontracted supply by 2021.
4. These projections could affect future global energy supply as producers cut spending and curtail project investments. The IEA estimates that investments in oil and gas have fallen by an unprecedented 25% in 2015.
5. At the same time, the Paris Agreement has given new impetus for the development of greener energy systems, as awareness of the need to do more to mitigate greenhouse gas emissions grows. The declining cost of renewables has also encouraged investments in clean energy. According to Bloomberg New Energy Finance’s New Energy Outlook Report for 2016, renewables will attract US$7.8 trillion in investments between 2016 and 2040, compared to US$2.1 trillion for fossil fuels.
6. Advances in technology are also having a discernible impact on energy systems and networks. The increasing deployment of smart energy infrastructure and distributed generation is altering the traditional roles of consumers and grid operators, and the way we generate, distribute and use energy. Consumers are now more empowered than ever to generate their own electricity, optimise their energy use, and respond to market conditions.
7. In the face of these ”New Energy Realities”, policy makers, regulators and market players alike need to prepare themselves well, to ride on the new wave of opportunities while addressing the challenges ahead, so as to build a more sustainable global energy system.
Announcement on new LNG importers
8. The uncertainties in the global oil and gas markets further underscores the need for Singapore, as a small open economy with no indigenous energy resources, to enhance the competitiveness and security of our natural gas supply, which is a key energy resource for us.
9. Hence, in June 2014, the Energy Market Authority (EMA) launched a two-stage competitive request-for-proposal (RFP) to appoint up to two new importers to supply Singapore with 1 million tonnes per annum (Mtpa) of liquefied natural gas (LNG) each or for up to 3 years, whichever is reached earlier. This will meet demand beyond our initial 3 Mtpa franchise and further complement other piped sources of natural gas.
10. Today, I am pleased to announce that Pavilion Gas and Shell have been appointed as the term importers for the next tranche of LNG for Singapore. These two companies were selected on the basis of the reliability, flexibility and competitive-pricing of their LNG supplies. They have also secured strong support from buyers.
11. Singapore’s gas consumers will benefit from the new and improved terms offered by the two companies. For example, buyers have been offered shorter term contracts and alternate price indices, such as the Henry Hub and SGX’s LNG Index Group (“SLiNG”).
12. Beyond this next tranche of LNG imports, which is expected to commence in 2017, EMA also plans to allow third party spot imports and new piped natural gas imports on a case-by-case basis. This will further augment the diversity of gas supply sources in Singapore, and encourage more gas-on-gas competition in the domestic market.
Improving technology for utilities in a smarter nation
13. In addition to enhanced competition, we want to use technological advances, such as the Internet-of-Things and data science, to develop a smart energy sector that is resilient, innovative and sustainable. To this end, Singapore is making a push towards the vision of a “Smart Nation” to harness the power of networks and data to improve lives and create economic opportunity.
14. In that regard, we are studying the wider deployment of advanced meters across all our utilities. EMA is partnering the national water agency, PUB, and Singapore Power to launch a call-for-proposal to develop and test-bed integrated advanced metering solutions for electricity, gas and water supply to consumers. It is an opportunity for industry to propose an innovative and integrated solution that can enhance productivity, by enabling remote monitoring or reading of utility meters, as well as improve service delivery, by enabling the timely provision of energy and water consumption information to consumers on their mobile devices. This would allow consumers to make informed decisions on their consumption and conservation of utilities. The results of the test-bed will help us assess whether and how we can deploy advanced metering solutions nation-wide, in tandem with our plans to have full retail contestability in the electricity market by 2018.
Encouraging demand-side management in Singapore
15. Another opportunity created by technological advances and smarter energy systems is in demand-side management. It allows consumers to actively manage their energy consumption in response to market conditions, thereby optimising their electricity bills. The power system also benefits from greater efficiency as electricity demand peaks are smoothened.
16. Hence, EMA will be taking the lead to facilitate demand-side management initiatives. I am pleased to announce the launch of Project OptiWatt, a pilot programme on demand-side management, where EMA will work with 16 partners to explore initiatives to optimise energy consumption. These partners collectively straddle the energy value chain comprising Institutes of Higher Learning (IHLs), government agencies, private companies, electricity retailers, research institutions and the electricity grid operator. A memorandum of understanding (MOU) will be signed today to officially mark the commencement of this partnership.
17. Our IHLs and government agencies will explore adjusting their consumption patterns without affecting existing operations. For example, electricity retailer Red Dot Power pays participating consumers to voluntarily reduce electricity consumption in certain pre-identified periods. A trial with Nanyang Polytechnic demonstrated that its chillers – amounting to about 7% of the Polytechnic’s energy consumption – can be curtailed for half an hour with minimal impact to users within the premises.
18. To enable such initiatives to be scaled-up, EMA will be collaborating with Professor Frank Wolak of Stanford University to measure consumer responsiveness to incentives and to evaluate business models for their sustainability.
19. EMA will also work with companies and electricity retailers on technologies and business models for the Interruptible Load and Demand Response programmes, which are part of the broader demand-side management initiatives. The electricity grid operator, Singapore Power, will study how demand-side management technologies and initiatives can be incorporated in the grid network planning process to bring benefits to consumers and the power system.
20. We hope that these pilots will demonstrate the benefits of demand-side management, and catalyse new business models, technological innovation and consumer engagement so that such initiatives will be more widely accepted.
Release of ‘Singapore Electricity Market Outlook’ to facilitate power generation investments in Singapore
21. Even as we keep a close watch on current volatility in the market, it is essential that policymakers, regulators and companies take a long term view of our energy landscape.
22. To this end, last October, EMA conducted an industry consultation on initiatives to facilitate future power generation investments. Arising from the feedback, EMA will launch the inaugural edition of the “Singapore Electricity Market Outlook” today, which will give, among other things, indicative projections on Singapore’s electricity demand. The inaugural publication also includes a special feature on the outlook of solar photovoltaic (PV) in Singapore. This will provide greater visibility on factors such as the solar generation profile across a typical day based on historical irradiance data in Singapore. The regular release of the Electricity Market Outlook will provide salient information for industry to form a strategic view and better inform investment decisions as the energy sector in Singapore evolves.
Release of consultation paper on the policy framework for Energy Storage Systems
23. To keep pace with the growing share of solar in Singapore’s electricity generation mix, we are taking proactive steps to address the issue of intermittency and to ensure grid stability. Energy storage systems offer one solution, particularly with advances in technology and reductions in cost.
24. EMA and Singapore Power have jointly launched an energy storage test-bed for grid-level energy storage solutions, which will help us to establish the standards and guidelines for the deployment of such storage systems.
25. To facilitate wider deployment of energy storage, it is important to ensure that our policy, regulations and market framework remains current and facilitates new business models put forth by industry. Therefore, EMA will release a consultation paper today to seek views from industry and other stakeholders on the regulation, licensing and market framework for energy storage.
IEA welcomes Singapore as an Association Country
26. As we continue to develop initiatives and policies that enhance Singapore’s domestic energy market, international energy cooperation is critical in our efforts to learn from best practices and to ensure energy security and sustainability. International energy organisations such as the IEA play a central role in facilitating such cooperation. In particular, IEA Executive Director Dr Fatih Birol has been active and instrumental in shaping the IEA’s drive towards a more inclusive global energy architecture.
27. Singapore supports the IEA’s vision to expand its outreach to emerging economies through the Association initiative, which was launched in 2015 to allow the IEA to engage countries outside of the Organisation for Economic Co-operation and Development (OECD).
28. To deepen our cooperation in a more structured way, I am happy to share that the IEA has welcomed Singapore as an IEA Association Country. Becoming an Association Country is a natural extension of Singapore’s already close collaboration with the IEA. It will allow us to further participate in the global energy dialogue, and keep abreast of new technical developments in the energy sector.
29. Singapore and IEA are committed to ensure that our enhanced relationship is underpinned by substantive cooperation for the benefit of the region. For a start, Singapore will partner the IEA on two new initiatives.
30. First, we will establish a Singapore-IEA regional training hub, which will enable the IEA to use Singapore as a base to build capabilities in the region. In 2017, we will host a regional run of the IEA Energy Efficiency Training Week aimed at policymakers and officials.
31. Second, we will host an annual Singapore-IEA Forum at SIEW, which will develop a regular platform to drive future-oriented energy discussions on topics such as new technologies and innovation.
32. Many of the policy initiatives that Singapore is undertaking – to encourage innovative demand-side energy management solutions, build up smart grids, and support energy storage – aim to strengthen our long-term energy competitiveness, security, and sustainability. These solutions will also be relevant for a rapidly urbanising Asia, which is also the centre of gravity for global growth. Singapore can serve as a test-bed for companies that wish to develop innovative urban energy solutions that can subsequently be scaled to serve regional and global demand.
33. We also hope that Singapore can serve as a platform where best practices are learnt and shared. To this end, throughout this week of SIEW events, I encourage all of you to engage in an active exchange of views with the other energy professionals, policymakers and industry players present, to benefit from each other’s experiences and generate solutions to forge a substantive energy future.
34. Thank you once again for joining us at the Singapore International Energy Week. I wish you an interesting and productive week ahead.
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